Officials say the decline is probably due to an uncertain job outlook. A new report from the U.S. Commerce Department shows construction of new homes in August fell to its lowest level in 17 years.
The downturn has resulted in the loss of thousands of construction jobs across the country. The economic slump is making some construction trade students nervous.
Carpentry students at Northwest Technical College in Bemidji get lots of hands-on experience. They even build a house right on campus.
They hope the training will get them a good job after graduation, but the sour economy has some students skeptical.
Seth Hanson, 18, of Clarkfield, says he's keeping a close eye on the housing market. Hanson hopes to someday start his own construction business in the Twin Cities.
"A lot of the housing developments you see down there are on pause," said Hanson. "People are trying to make it but they can't, so I was kind of hoping the market would be on a rebound by the time I get done with college."
Some students say they try not to think too much about the bad economy.
Wyatt Wilcox of Bemidji hopes to get a job in northern Minnesota after he graduates next year. He says if he has to, he'll move to where the jobs are.
Wilcox figures more jobs will open up as people retire.
“I was kind of hoping the market would be on a rebound by the time I get done with college.”Seth Hanson
"Most of the people that are in the construction fields right now are in their mid-50s on average," Wilcox said. "Somebody has to replace them, and this is what I want to get into."
But the slow economy has some baby boomers thinking twice about retirement.
Northwest Technical College electrical instructor Gwen Oster says carpenters and electricians near retirement age aren't leaving their jobs as fast as people thought they would.
"Now they're at the retirement age, but maybe some of them don't have the pension they thought they were going to have because of the economy, and so they're working longer," said Oster. "Those that thought they were going to retire at 58 are maybe going to work until they're 65 for the insurance benefits."
The tight job market means new technical college graduates may have a tough time finding work in construction.
Melinda Voss, spokeswoman for the Minnesota State Colleges and Universities system, says MnSCU is constantly tinkering with its vocational offerings based on the job market.
Voss says it's too early to tell, but if the economic slump continues, the state could cap enrollment in construction programs or reduce the number of programs offered.
"Currently we have a moratorium on enrollment in electricians programs," Voss said. "We are examining other construction trade programs and seeing what is the best thing to do there."
Minnesota lost more than 7,000 construction jobs over the past year. Nationally, construction of new homes is at its slowest pace since January of 1991.
Minnesota Department of Employment and Economic Development spokeswoman Kirsten Morell says the news isn't all bad.
Construction of new steel and power plants in northern Minnesota is expected to soon create thousands of new construction jobs. Morell says the 10-year outlook for Minnesota is positive.
"There is hope out there," said Morell. "Our long-term projections indicate that by around 2016, there should be almost 7.5 percent growth in the construction industry, and these things are cyclical. I think it's anyone's guess when we'll be out of this downturn."
Short term, the outlook isn't good. Analysts believe construction will continue falling for many more months as builders struggle to get rid of their backlog of unsold homes.